QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018

or

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number 000-51371

LINCOLN EDUCATIONAL SERVICES CORPORATION

(Exact name of registrant as specified in its charter)

New Jersey

57-1150621

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

200 Executive Drive, Suite 340

07052

West Orange, NJ

(Zip Code)

(Address of principal executive offices)

(973) 736-9340

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an
emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☐ (Do not check if a smaller reporting company)

Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 6, 2018, there were 24,641,792 shares of the registrant’s common stock outstanding.

Preferred stock, no par value - 10,000,000 shares authorized, no shares issued and outstanding
at September 30, 2018 and December 31, 2017

-

-

Common stock, no par value - authorized: 100,000,000 shares at September 30, 2018 and December
31, 2017; issued and outstanding: 30,552,333 shares at September 30, 2018 and 30,624,407 shares at December 31, 2017

141,377

141,377

Additional paid-in capital

29,464

29,334

Treasury stock at cost - 5,910,541 shares at September 30, 2018 and December 31, 2017

Business Activities— Lincoln Educational Services Corporation and its subsidiaries (collectively, the “Company”, “we”, “our” and “us”, as applicable) provide diversified career-oriented post-secondary education to recent
high school graduates and working adults. The Company, which currently operates 23 schools in 14 states, offers programs in automotive technology, skilled trades (which among other programs include HVAC, welding and computerized
numerical control and electronic systems technology), healthcare services (which among other programs include nursing, dental assistant, medical administrative assistant and pharmacy technician), hospitality services (which include culinary,
therapeutic massage, cosmetology and aesthetics) and business and information technology (which includes information technology and criminal justice programs). The schools operate under Lincoln Technical Institute, Lincoln College of Technology,
Lincoln College of New England, Lincoln Culinary Institute, and Euphoria Institute of Beauty Arts and Sciences and associated brand names. Most of the campuses serve major metropolitan markets and each typically offers courses in multiple areas
of study. Five of the campuses are destination schools, which attract students from across the United States and, in some cases, from abroad. The Company’s other campuses primarily attract students from their local communities and surrounding
areas. All of the campuses are nationally or regionally accredited and are eligible to participate in federal financial aid programs offered by the U.S. Department of Education (the “DOE”) and financial aid programs of applicable state education
agencies which allow students to apply for and access federal student loans as well as other forms of financial aid.

We operate in three reportable business segments: (a) the Transportation and Skilled Trades segment, (b) the Healthcare and Other Professions (“HOPS”)
segment, and (c) the Transitional segment, which consists of schools that have been or are currently being taught out. In November 2015, the Company’s Board of Directors approved a plan for the Company to divest the 18 campuses then comprising
the HOPS segment due to a strategic shift in the Company’s business strategy. The Company underwent an exhaustive process to divest the HOPS schools which proved successful in attracting various prospective purchasers but, ultimately, did not
result in a transaction that our Board believed would enhance shareholder value. By the end of 2017, we had closed seven underperforming campuses leaving a total of eleven campuses remaining under the HOPS segment. By the end of 2018, we will
close one additional campus in Southington, Connecticut. The Company believes that the closures of the aforementioned campuses have positioned the HOPS segment and the Company to be profitable going forward.

The combination of several factors, including, among other things, the inability of a prospective purchaser of the HOPS segment to close on the purchase,
the improvements the Company has implemented in the HOPS segment operations and the closure of seven underperforming campuses, resulted in the Board reevaluating its divestiture plan and the Board’s determination that shareholder value would more
likely be enhanced by continuing to operate our HOPS segment as revitalized. Consequently, the Board of Directors has abandoned the plan to divest the HOPS segment and the Company intends to retain and continue to operate the remaining campuses
in the HOPS segment. The results of operations of the campuses included in the HOPS segment are reflected as continuing operations in the condensed consolidated financial statements.

In 2016, the Company completed the teach-out of its Hartford, Connecticut; Fern Park,
Florida; and Henderson (Green Valley), Nevada campuses, which originally operated in the HOPS segment. In 2017, the Company completed the teach-out of its Northeast Philadelphia, Pennsylvania; Center City Philadelphia, Pennsylvania; West Palm
Beach, Florida; Brockton, Massachusetts; and Lowell, Massachusetts schools, which also were previously in the HOPS segment and all of which were taught out and closed by December 2017 and are included in the Transitional segment as of
December 31, 2017.

On August 14, 2017, New England Institute of Technology at Palm Beach, Inc. (“NEIT”), a wholly-owned subsidiary of the Company, consummated the sale of the
real property located at 2400 and 2410 Metrocentre Boulevard East, West Palm Beach, Florida, including the improvements and other personal property located thereon (the “West Palm Beach Property”), to Tambone Companies, LLC, pursuant to a
previously disclosed purchase and sale agreement entered into on March 14, 2017. Pursuant to the terms of the sale agreement, as subsequently amended, the purchase price for the West Palm Beach Property was $15.8 million. As a result, the Company
recorded a gain on the sale in the amount of $1.5 million. As previously disclosed, the West Palm Beach Property served as collateral for a short term loan in the principal amount of $8.0 million obtained by the Company from its lender, Sterling
National Bank, on April 28, 2017, which loan matured upon the earlier of the sale of the West Palm Beach Property or October 1, 2017. Accordingly, on August 14, 2017, concurrently with the consummation of the sale of the West Palm Beach Property,
the Company repaid the term loan in an aggregate amount of $8.0 million, consisting of principal and accrued interest.

On July 9, 2018, NEIT entered into a commercial contract (the “Sale Agreement”) with Elite Property Enterprise, LLC, pursuant to which NEIT agreed to sell
to Elite Property Enterprise, LLC the real property owned by NEIT located at 1126 53rd Court North, Mangonia Park, Palm Beach County, Florida and the improvements and certain personal property located thereon (the “Mangonia Park
Property”), for a cash purchase price of $2,550,000. On August 23, 2018, NEIT, consummated the sale of the Mangonia Park Property. At the closing, NEIT paid a real estate
brokerage fee equal to 5% of the gross sales price and other customary closing costs and expenses. Pursuant to the provisions of the Company’s Credit Agreement with its lender,
Sterling National Bank, the net cash proceeds of the sale of the Mangonia Park Property were deposited into an account with the lender to serve as additional security for loans and other financial accommodations provided to the Company and its
subsidiaries under the Credit Agreement.

On July 11, 2018, the Company and its wholly-owned subsidiaries (collectively with the Company, the “Borrowers”) entered into a third amendment (the
“Third Amendment”) of the Credit Agreement dated as of March 31, 2017 (as previously amended, the “Credit Agreement”) between the Borrowers and Sterling National Bank, as lender (the “Bank”). Prior to the Third Amendment, if the Mangonia Park
Property was sold, NEIT was required to apply the net proceeds of such sale to repay a corresponding amount of the outstanding principal balance of revolving loans provided under the Credit Agreement, which repayment of principal would
permanently reduce the principal amount of revolving loans available under the Credit Agreement. As a result of the Third Amendment, when the Mangonia Park Property was sold, NEIT deposited the net proceeds of such sale into a non-interest
bearing cash collateral account to be held at and by the Bank as additional collateral for the loans outstanding under the Credit Agreement. Pursuant to the Third Amendment, the Bank reserves the right to apply the funds held in such cash
collateral account to the repayment of the outstanding principal balance of the loans outstanding under the Credit Agreement.

On August 20, 2018, the Company decided to cease operations, effective December 31, 2018, of the Lincoln College of New England (“LCNE”) campus at
Southington, Connecticut. The decision to close the campus follows the previously reported placement of LCNE on probation by the college’s institutional accreditor, the New England Association of Schools and Colleges (“NEASC”). After evaluating
alternative options, the Company concluded that teaching out and closing the campus was in the best interest of the Company and its students. Subsequent to formalizing the LCNE closure decision, the Company partnered with Goodwin College, another
NEASC- accredited institution in the region, to assist LCNE students to complete their programs of study. The majority of the LCNE students will continue their education at Goodwin College thereby limiting some of the Company’s closing costs. The
revenue, net loss and ending population of LCNE, as of December 31, 2017, were $8.4 million, $1.6 million and 397 students, respectively. The Company expects to record costs associated with the closure in 2018 in the range of $3.5 million to $4.5
million including $2 million in connection with the termination of the LCNE campus lease, which will be paid in equal monthly installments through January 2020, and approximately $700,000 of severance payments. LCNE results, which was previously
reported in the HOPS segment, is now included in the Transitional segment as of September 30, 2018. The Company expects to complete the teach-out and close the LCNE campus by December 31, 2018.

Liquidity—For the last several years, the Company and the proprietary school sector have faced deteriorating earnings. Government regulations have negatively impacted earnings by making it more difficult for
potential students to obtain loans, which, when coupled with the overall economic environment, have discouraged potential students from enrolling in post-secondary schools. In light of these factors, the Company has incurred significant operating
losses as a result of lower student population. Despite these challenges, the Company believes that its likely sources of cash should be sufficient to fund operations for the next twelve months and thereafter for the foreseeable future. At
September 30, 2018, the Company’s sources of cash primarily included cash and cash equivalents of $18.0 million (of which $7.8 million is restricted). The Company’s cash balance is affected by seasonality such that the cash balance is lower in
the first half of the year and increases in the second half of the year. Refer to Note 5 for more information on the Company’s revolving loan facility. The Company is also continuing to take actions to improve cash flow by aligning its cost
structure to its student population.

Basis of Presentation – The accompanying
unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the
United States of America (“GAAP”) for interim financial statements. Certain information and footnote disclosures normally included in annual financial statements have been omitted or condensed pursuant to such regulations. These statements,
which should be read in conjunction with the December 31, 2017 consolidated financial statements and related disclosures of the Company included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, reflect all
adjustments, consisting of normal recurring adjustments necessary to present fairly the consolidated financial position, results of operations and cash flows for such periods. The results of operations for the nine months ended September 30,
2018 are not necessarily indicative of the results that may be expected for the full fiscal year ending December 31, 2018.

The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts
and transactions have been eliminated.

Use of Estimates in the Preparation of Financial
Statements – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. On an ongoing basis, the Company evaluates the estimates and assumptions used in the preparation of
its financial statements, including those related to revenue recognition, bad debts, impairments, fixed assets, income taxes, benefit plans and certain accruals. Actual results could materially differ from those estimates.

New Accounting Pronouncements – In August
2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework—Changes to the
Disclosure Requirements for Defined Benefit Plans.” This ASU adds, modifies and clarifies several disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. This guidance is effective for fiscal
years ending after December 15, 2020. Early adoption is permitted. We are currently assessing the effect that this ASU will have on our condensed consolidated financial statements and related disclosures.

The FASB has issued ASU 2017-09, “Compensation—Stock Compensation (Topic 718) — Scope of Modification Accounting.” ASU 2017-09 applies to entities that
change the terms or conditions of a share-based payment award. The FASB adopted ASU 2017-09 to provide clarity and reduce diversity in practice as well as cost and complexity when applying the guidance in Topic 718, Compensation—Stock
Compensation, to the modification of the terms and conditions of a share-based payment award. The amendments provide guidance on determining which changes to the terms and conditions of share-based payment award require an entity to apply
modification accounting under Topic 718. ASU 2017-09 is effective for all entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in
any interim period, for public business entities for reporting periods for which financial statements have not yet been issued. The adoption of ASU 2017-09, which was adopted on January 1, 2018, had no impact on the Company’s condensed
consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220)”. The updated guidance allows entities to
reclassify stranded income tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Act”) from accumulated other comprehensive income to retained earnings in their consolidated financial statements. Under the Tax Act, deferred taxes were
adjusted to reflect the reduction of the historical corporate income tax rate to the newly enacted corporate income tax rate, which left the tax effects on items within accumulated other comprehensive income stranded at an inappropriate tax rate.
The updated guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. Early adoption is permitted in any interim period and should be applied either in the period of adoption or
retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. The Company is in the process of assessing the impact this standard will have on our
consolidated financial statements and related disclosures.

In November 2016, the FASB issued ASU 2016-18: “Statement of Cash Flows (Topic 230): Restricted Cash.” This guidance was issued to address the disparity
that exists in the classification and presentation of changes in restricted cash on the statement of cash flows. The amendments will require that the statement of cash flows explain the change during the period in total cash, cash equivalents and
restricted cash. The amendments are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. We adopted the new standard effective January 1, 2018. The
amendments were applied using a retrospective transition method to each period presented. The Company includes in its cash and cash-equivalent balances in the condensed consolidated statements of cash flows those amounts that have been classified
as restricted cash and restricted cash equivalents for each of the periods presented.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” to address
eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those
fiscal years. We adopted the new standard effective January 1, 2018. The adoption of ASU 2016-15 had no impact on the Company’s condensed consolidated financial statements.

In May 2014, the FASB issued a comprehensive new revenue recognition standard, ASU 2014-09, “Revenue from Contracts with Customers.” The amendments include ASU 2016-08, “Revenue from Contracts with Customers (Topic 606)—Principal versus Agent Considerations,” issued in March 2016, which clarifies the
implementation guidance for principal versus agent considerations in ASU 2014-09, and ASU 2016-10, “Revenue from Contracts with Customers (Topic 606)—Identifying Performance Obligations and Licensing,” issued in April 2016, which amends the
guidance in ASU No. 2014-09 related to identifying performance obligations. The new standard, which supersedes previously existing revenue recognition guidance, creates a five-step model for revenue recognition requiring companies to exercise
judgment when considering contract terms and relevant facts and circumstances. The five-step model requires (1) identifying the contract, (2) identifying the separate performance obligations in the contract, (3) determining the transaction price,
(4) allocating the transaction price to the separate performance obligations and (5) recognizing revenue at the time that each performance obligation is satisfied. The standard also requires expanded disclosures surrounding revenue recognition.
The standard is effective for fiscal periods beginning after December 15, 2017 and allows for either full retrospective or modified retrospective adoption.

We adopted the new standard effective January 1, 2018 using the modified retrospective approach. The Company’s revenue streams primarily consist of tuition
and related services provided to students over the course of the program as well as other transactional revenue such as tools. Based on the Company's assessment, the analysis of the contract portfolio under ASU 2016-10 results in the revenue for
the majority of the Company's student contracts being recognized over time which is consistent with the Company's previous revenue recognition model. For all student contracts, there is continuous transfer of control to the student and the number
of performance obligations under ASU 2016-10 is consistent with those identified under the existing standard. The impact of the adoption of the new standard on revenue recognition for student contracts is immaterial on its condensed consolidated
financial statements. See additional information in Note 3.

In February 2016, the FASB issued guidance requiring lessees to recognize a right-of-use asset and a lease liability on the balance sheet for substantially
all leases, with the exception of short-term leases. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the statements of income. The guidance is effective for annual
periods, including interim periods within those periods, beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the impact that the update will have on the Company’s condensed consolidated financial
statements and we plan on adopting this on January 1, 2019.

Stock-Based Compensation – The Company measures
the value of stock options on the grant date at fair value, using the Black-Scholes option valuation model. The Company amortizes the fair value of stock options, net of estimated forfeitures, utilizing straight-line amortization of compensation
expense over the requisite service period of the grant.

The Company measures the value of service and performance-based restricted stock on the fair value of a share of common stock on the date of the grant. The
Company amortizes the fair value of service-based restricted stock utilizing straight-line amortization of compensation expense over the requisite service period of the grant.

The Company amortizes the fair value of the performance-based restricted stock based on the determination of the probable outcome of the performance
condition. If the performance condition is expected to be met, then the Company amortizes the fair value of the number of shares expected to vest on a straight-line basis over the requisite performance period of the grant. However, if the
associated performance condition is not expected to be met, then the Company does not recognize the stock-based compensation expense.

Income Taxes – The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes” (“ASC 740”). This
statement requires an asset and a liability approach for measuring deferred taxes based on temporary differences between the financial statement and tax bases of assets and liabilities existing at each balance sheet date using enacted tax rates
for years in which taxes are expected to be paid or recovered.

In accordance with ASC 740, the Company assesses our deferred tax asset to determine whether all or any portion of the asset is more likely than not
unrealizable. A valuation allowance is required to be established or maintained when, based on currently available information, it is more likely than not that all or a portion of a deferred tax asset will not be realized. In accordance with ASC
740, our assessment considers whether there has been sufficient income in recent years and whether sufficient income is expected in future years in order to utilize the deferred tax asset. In evaluating the realizability of deferred income tax
assets, the Company considered, among other things, historical levels of income, expected future income, the expected timing of the reversals of existing temporary reporting differences, and the expected impact of tax planning strategies that may
be implemented to prevent the potential loss of future income tax benefits. Significant judgment is required in determining the future tax consequences of events that have been recognized in our consolidated financial statements and/or tax
returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on the Company’s consolidated financial position or results of operations. Changes in, among other things, income tax
legislation, statutory income tax rates, or future income levels could materially impact the Company’s valuation of income tax assets and liabilities and could cause our income tax provision to vary significantly among financial reporting
periods. See information regarding the impact of the Tax Cuts and Jobs Act in Note 7.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. During the three and nine months ended
September 30, 2018 and 2017, the Company did not recognize any interest and penalties expense associated with uncertain tax positions.

The weighted average number of common shares used to compute basic and diluted loss per share for the three and nine months ended September 30, 2018 and
2017 was as follows:

Three Months Ended

September, 30

Nine Months Ended

September, 30

2018

2017

2018

2017

Basic shares outstanding

24,532,648

24,023,540

24,386,689

23,866,485

Dilutive effect of stock options

-

-

-

-

Diluted shares outstanding

24,532,648

24,023,540

24,386,689

23,866,485

For the three months ended September 30, 2018 and 2017, options to acquire 26,083 and 552,189 shares were excluded from the above table because the Company
reported a net loss for each period and, therefore, their impact on reported loss per share would have been antidilutive. For the nine months ended September 30, 2018 and 2017, options to acquire 57,680 and 572,428 shares were excluded from the
above table because the Company reported a net loss for each period and, therefore, their impact on reported loss per share would have been antidilutive. For the three and nine months ended September 30, 2018 and 2017, options to acquire 139,000
and 170,667 shares, respectively, were excluded from the above table because they have an exercise price that is greater than the average market price of the Company’s common stock and, therefore, their impact on reported loss per share would
have been antidilutive.

3.

REVENUE RECOGNITION

Prior to adoption of ASU 2014-09

Revenues are derived primarily from programs taught at our schools. Tuition revenues, textbook sales and one-time fees, such as nonrefundable application
fees and course material fees, are recognized on a straight-line basis over the length of the applicable program as the student proceeds through the program, which is the period of time from a student’s start date through his or her graduation
date (including internships or externships, if any, occurring prior to graduation), and we complete the performance of teaching the student entitling us to the revenue. Other revenues, such as tool sales and contract training revenues, are
recognized as goods are delivered or training completed. On an individual student basis, tuition earned in excess of cash received is recorded as accounts receivable, and cash received in excess of tuition earned is recorded as unearned tuition.

We evaluate whether collectability of revenue is reasonably assured prior to the student commencing a program by attending class and reassess collectability
of tuition and fees when a student withdraws from a course. We calculate the amount to be returned under Title IV and its stated refund policy to determine eligible charges and, if there is a balance due from the student after this calculation,
we expect payment from the student. We have a process to pursue uncollected accounts whereby, based upon the student’s financial means and ability to pay, a payment plan is established with the student to ensure that collectability is
reasonable. We continuously monitor our historical collections to identify potential trends that may impact our determination that collectability of receivables for withdrawn students is realizable. If a student withdraws from a program prior
to a specified date, any paid but unearned tuition is refunded. Refunds are calculated and paid in accordance with federal, state and accrediting agency standards. Generally, the amount to be refunded to a student is calculated based upon the
period of time the student has attended classes and the amount of tuition and fees paid by the student as of his or her withdrawal date. These refunds typically reduce deferred tuition revenue and cash on our condensed consolidated balance sheets
as we generally do not recognize tuition revenue in our condensed consolidated statements of income (loss) until the related refund provisions have lapsed. Based on the application of our refund policies, we may be entitled to incremental revenue
on the day the student withdraws from one of our schools. We record revenue for students who withdraw from one of our schools when payment is received because collectability on an individual student basis is not reasonably assured.

After adoption of ASU 2014-09

On January 1, 2018, we adopted the new standard on revenue recognition, ASU 2014-09, using the modified retrospective approach of ASU 2016-10. The adoption
of the guidance in ASU 2014-09 as amended by ASU 2016-10 did not have a material impact on the measurement or recognition of revenue in any prior or current reporting periods and there was no adjustment to retained earnings. The core principle
of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to students in an amount that reflects the consideration to which the company expects to be entitled in exchange for such goods or
services.

Substantially all of our revenues are considered to be revenues from contracts with
students. The related accounts receivable balances are recorded in our balance sheets as student accounts receivable. We do not have significant revenue recognized from performance obligations that were satisfied in prior periods, and
we do not have any transaction price allocated to unsatisfied performance obligations other than in our unearned tuition. We record revenue for students who withdraw from one of our
schools only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Unearned tuition represents
contract liabilities primarily related to our tuition revenue. We have elected not to provide disclosure about transaction prices allocated to unsatisfied performance
obligations if contract durations are less than one-year, or if we have the right to consideration from a student in an amount that corresponds directly with the value provided to the student for performance obligations completed to date. We have
assessed the costs incurred to obtain a contract with a student and determined them to be immaterial.

Unearned tuition is the only significant contract asset or liability impacted by our adoption of ASU 2016-10. Unearned tuition in the amount of $21.5 million and $24.6 million is recorded in the current liabilities section of the accompanying condensed consolidated balance sheets as of September 30, 2018 and December
31, 2017, respectively. The change in the contract liability balance during the period ended September 30, 2018 is the result of payments received in advance of satisfying performance obligations, offset by revenue recognized during that period.
Revenue recognized for the three and nine month periods ended September 30, 2018 that were included in the contract liability balance at the beginning of the year was $0.3 million and $23.5 million, respectively.

The following table depicts the timing of revenue recognition:

Three months ended September 30, 2018

Nine months ended September 30, 2018

Transportation

and Skilled

Trades

Segment

Healthcare

and Other

Professions

Segment

Transitional

Segment

Consolidated

Transportation

and Skilled

Trades

Segment

Healthcare

and Other

Professions

Segment

Transitional

Segment

Consolidated

Timing of Revenue Recognition

Services transferred at a point in time

$

4,514

$

1,162

$

56

$

5,732

$

8,219

$

2,847

$

62

$

11,128

Services transferred over time

46,492

17,089

765

64,346

127,619

49,707

4,633

181,959

Total revenues

$

51,006

$

18,251

$

821

$

70,078

$

135,838

$

52,554

$

4,695

$

193,087

Three months ended September 30, 2017

Nine months ended September 30, 2017

Transportation

and Skilled

Trades

Segment

Healthcare

and Other

Professions

Segment

Transitional

Segment

Consolidated

Transportation

and Skilled

Trades

Segment

Healthcare

and Other

Professions

Segment

Transitional

Segment

Consolidated

Timing of Revenue Recognition

Services transferred at a point in time

$

3,799

$

902

$

78

$

4,779

$

7,173

$

2,199

$

10

$

9,382

Services transferred over time

44,996

14,988

2,545

62,529

127,111

44,271

13,688

185,070

Total revenues

$

48,795

$

15,890

$

2,623

$

67,308

$

134,284

$

46,470

$

13,698

$

194,452

4.

GOODWILL AND LONG-LIVED ASSETS

The Company reviews long-lived assets for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be
recoverable. There were no long-lived asset impairments during the three and nine months ended September 30, 2018 and 2017.

The Company reviews goodwill for impairment when indicators of impairment exist. Annually, or more frequently if necessary, the Company evaluates goodwill
with indefinite lives for impairment, with any resulting impairment reflected as an operating expense. As of September 30, 2018 and 2017, the Company concluded that there was no indicator of potential impairment and, accordingly, the Company did
not test goodwill for impairment.

The carrying amount of goodwill at September 30, 2018 and 2017 is as follows:

Gross

Goodwill

Balance

Accumulated

Impairment

Losses

Net

Goodwill

Balance

Balance as of January 1, 2018

$

117,176

$

(102,640

)

$

14,536

Adjustments

-

-

-

Balance as of September 30, 2018

$

117,176

$

(102,640

)

$

14,536

Gross

Goodwill

Balance

Accumulated

Impairment

Losses

Net

Goodwill

Balance

Balance as of January 1, 2017

$

117,176

$

(102,640

)

$

14,536

Adjustments

-

-

-

Balance as of September 30, 2017

$

117,176

$

(102,640

)

$

14,536

As of September 30, 2018 and 2017, the goodwill balance is related to the Transportation and Skilled Trades segment.

5.

LONG-TERM DEBT

Long-term debt consists of the following:

September 30,

2018

December 31,

2017

Credit agreement

$

25,000

$

53,400

Deferred Financing Fees

(626

)

(807

)

24,374

52,593

Less current maturities

-

-

$

24,374

$

52,593

On March 31, 2017, the Company entered into a secured revolving credit agreement (the “Credit
Agreement”) with Sterling National Bank (the “Bank”) pursuant to which the Company obtained a credit facility in the aggregate principal amount of up to $55 million (the “Credit Facility”). Subsequently, as a result of a November 29, 2017
amendment of the Credit Facility, aggregate availability of funds under the Credit Facility increased to $65 million, consisting of (a) a $25 million revolving loan facility (“Facility 1”), (b) a $25 million revolving loan facility (“Facility
2”), which includes a sublimit amount for letters of credit of $10 million, and (c) a $15 million revolving credit loan (“Facility 3”). The Credit Agreement was again
amended on February 23, 2018, to, among other things, effect certain modifications to the financial covenants and other provisions of the Credit Agreement and to allow the Company to pursue the sale of certain real property assets. The February
23, 2018 amendment increased the interest rate for borrowings under Facility 1 to a rate per annum equal to the greater of (x) the Bank’s prime rate plus 2.85% and (y) 6.00%. Prior to the February 23, 2018 amendment of the Credit Agreement,
revolving loans outstanding under Facility 1 bore interest at a rate per annum equal to the greater of (x) the Bank’s prime rate plus 2.50% and (y) 6.00%. Revolving loans under Facility 2 and Facility 3 bear interest at a rate per annum equal
to the greater of (x) the Bank’s prime rate and (y) 3.50%. As discussed in Note 1, pursuant to the most recent amendment of the Credit Agreement, which occurred on July 11, 2018, the Bank permitted the net proceeds of the sale of the Mangonia
Park Property to be deposited into a non-interest bearing cash collateral account to be held at and by the Bank as additional collateral for the loans outstanding under the Credit Facility, but reserved the right to apply the funds held in such
cash collateral account to the repayment of the outstanding principal balance of the loans outstanding under the Credit Facility. Prior to this most recent amendment of the Credit Agreement, the Company was required to apply the net proceeds
of such sale to repay a corresponding amount of the outstanding principal balance of revolving loans provided under the Credit Facility, which repayment of principal would have permanently reduced the principal amount of revolving loans
available under the Credit Facility.

The term of the Credit Facility is 38 months, maturing on May 31, 2020, except that Facility 3 will mature one year earlier, on May 31, 2019.

The Credit Facility is secured by a first priority lien in favor of the Bank on substantially all of the personal property owned by the Company as well as
mortgages on four parcels of real property owned by the Company in Colorado, Tennessee and Texas at which three of the Company’s schools are located, as well as a former school property owned by the Company located in Connecticut.

At the closing of the Credit Facility, the Company drew $25 million under Tranche A, which was used to repay the Company’s previous credit facility and to
pay transaction costs associated with closing the Credit Facility.

Under the terms of the Credit Agreement, all draws under Facility 2 for letters of credit or revolving loans and all draws under Facility 3 must be secured
by cash collateral in an amount equal to 100% of the aggregate stated amount of the letters of credit issued and revolving loans outstanding through draws from Facility 1 or other available cash of the Company.

Each issuance of a letter of credit under Facility 2 will require the payment of a letter of credit fee to the Bank equal to a rate per annum of 1.75% on
the daily amount available to be drawn under the letter of credit, which fee shall be payable in quarterly installments in arrears. Letters of credit totaling $6.2 million that were outstanding under a $9.5 million letter of credit facility
previously provided to the Company by the Bank, which letter of credit facility was set to mature on April 1, 2017, are treated as letters of credit under Facility 2.

The terms of the Credit Agreement provide that the Bank be paid an unused facility fee on the average daily unused balance of Facility 1 at a rate per annum
equal to 0.50%, which fee is payable quarterly in arrears. In addition, the Company is required to maintain, on deposit in one or more non-interest bearing accounts, a minimum of $5 million in quarterly average aggregate balances which if not
maintained, results in a fee of $12,500 payable to the Bank for that quarter.

In addition to the foregoing, the Credit Agreement contains customary representations, warranties and affirmative and negative covenants, including
financial covenants that restrict capital expenditures, prohibit the incurrence of a net loss for any fiscal year commencing with the fiscal year ending December 31, 2019 and require a minimum adjusted EBITDA and a minimum tangible net worth,
which is an annual covenant, as well as events of default customary for facilities of this type. As of September 30, 2018, the Company is in compliance with all covenants.

As of September 30, 2018, the Company had $25.0 million outstanding under the Credit Facility; offset by $0.6 million of deferred finance fees. As of
December 31, 2017, the Company had $53.4 million outstanding under the Credit Facility; offset by $0.8 million of deferred finance fees. As of September 30, 2018 and December 31, 2017, letters of credit in the aggregate principal amount of $5.5
million and $7.2 million, respectively, were outstanding under the Credit Facility. During the nine months ended September 30, 2018, the Company repaid all outstanding amounts as of December 31, 2017 on Facility 2 of $17.8 million and Facility 3
of $15 million.

Scheduled maturities of long-term debt at September 30, 2018 are as follows:

Year ending December 31,

2018

$

-

2019

-

2020

25,000

$

25,000

6.

STOCKHOLDERS’ EQUITY

Restricted Stock

The Company has two stock incentive plans: a Long-Term Incentive Plan (the “LTIP”) and a Non-Employee Directors Restricted Stock Plan (the “Non-Employee Directors Plan”).

Under the LTIP, certain employees receive awards of restricted shares of common stock of the Company based on service and performance. The number of shares
granted to each such employee is based on the fair market value of a share of common stock on the date of grant.

On February 23, 2018, restricted shares of common stock of the Company were granted to certain employees of the Company, which shares vested immediately.
There is no restriction on the right to vote or the right to receive dividends with respect to any of such restricted shares; however, the recipient can only sell or otherwise transfer the shares after the expiration of a specified period of time
ranging from 120 to 240 days following the date of grant.

On May 13, 2016 and January 16, 2017, performance-based restricted shares were granted to certain employees of the Company, which vest on March 15, 2017 and
March 15, 2018 based upon the attainment of a financial metric during each fiscal year ending December 31, 2016 and 2017. These shares were fully vested as of March 31, 2018 and are held without restriction.

On June 2, 2014 and December 18, 2014, performance-based restricted shares were granted to certain employees of the Company, which vest over three years
based upon the attainment of (i) a specified operating income margin during any one or more of the fiscal years in the period beginning January 1, 2015 and ending December 31, 2017 and (ii) the attainment of earnings before interest, taxes,
depreciation and amortization targets during each of the fiscal years ended December 31, 2015 through 2017. There is no restriction on the right to vote or the right to receive dividends with respect to any of these restricted shares.

Pursuant to the Non-Employee Directors Plan, each non-employee director of the Company receives an annual award of restricted shares of common stock of the
Company on the date of the Company’s annual meeting of shareholders. The number of shares granted to each non-employee director is based on the fair market value of a share of common stock on that date. The restricted shares vest on the first
anniversary of the grant date. There is no restriction on the right to vote or the right to receive dividends with respect to any of such restricted shares. In 2018, the non-employee directors have foregone the 2018 annual award of shares of
restricted stock.

For the nine months ended September 30, 2018 and 2017, the Company completed a net share settlement for 207,642 and 184,231 restricted shares, respectively,
on behalf of certain employees that participate in the LTIP upon the vesting of the restricted shares pursuant to the terms of the LTIP. The net share settlement was in connection with income taxes incurred on restricted shares that vested and
were transferred to the employees during 2018 and/or 2017, creating taxable income for the employees. At the employees’ request, the Company will pay these taxes on behalf of the employees in exchange for the employees returning an equivalent
value of restricted shares to the Company. These transactions resulted in a decrease of $0.4 million for each of the nine months ended September 30, 2018 and 2017, respectively, to equity on the condensed consolidated balance sheets as the cash
payment of the taxes effectively was a repurchase of the restricted shares granted in previous years.

The following is a summary of transactions pertaining to restricted stock:

Shares

Weighted

Average Grant

Date Fair Value

Per Share

Nonvested restricted stock outstanding at December 31, 2017

607,994

$

1.90

Granted

135,568

1.60

Canceled

-

-

Vested

(707,654

)

1.82

Nonvested restricted stock outstanding at September 30, 2018

35,908

2.23

The restricted stock expense for each of the three months ended September 30, 2018 and 2017 was less than $0.1 million and $0.3 million, respectively. The
restricted stock expense for each of the nine months ended September 30, 2018 and 2017 was $0.5 million and $0.9 million, respectively. The unrecognized restricted stock expense as of September 30, 2018 and December 31, 2017 was $0.1 million and
$0.3 million, respectively. As of September 30, 2018, outstanding restricted shares under the LTIP had aggregate intrinsic value of $0.1 million.

The fair value of the stock options used to compute stock-based compensation is the estimated present value at the date of grant using the Black-Scholes
option pricing model. The following is a summary of transactions pertaining to stock options:

Shares

Weighted

Average

Exercise Price

Per Share

Weighted

Average

Remaining

Contractual

Term

Aggregate

Intrinsic

Value (in

thousands)

Outstanding at December 31, 2017

167,667

$

12.11

2.97 years

$

-

Canceled

(28,667

)

11.98

-

Outstanding at September 30, 2018

139,000

12.14

3.04 years

-

Vested as of September 30, 2018

139,000

12.14

3.04 years

-

Exercisable as of September 30, 2018

139,000

12.14

3.04 years

-

As of September 30, 2018, there was no unrecognized pre-tax compensation expense.

The following table presents a summary of stock options outstanding:

At September 30, 2018

Stock Options Outstanding and Exercisable

Range of Exercise

Prices

Shares

Contractual

Weighted

Average Life

(years)

Weighted

Average Price

$

4.00-$13.99

91,000

3.67

$

7.79

$

14.00-$19.99

17,000

1.34

19.98

$

20.00-$25.00

31,000

2.10

20.62

139,000

3.04

12.14

7.

INCOME TAXES

The provision for income taxes for the three months ended
September 30, 2018 and 2017 was less than $0.1 million, or 9.1% of pretax loss, and less than $0.1 million, or 3.5% of pretax loss, respectively. The provision for income taxes for the nine months ended September 30, 2018 and 2017 was $0.2
million, or 1.3% of pretax loss, and $0.2 million, or 0.8% of pretax loss, respectively.

The Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to recover the existing
deferred tax assets. In this regard, a significant objective negative evidence was the cumulative losses incurred by the Company in recent years. On the basis of this evaluation, the realization of the Company’s deferred tax assets was not
deemed to be more likely than not and, thus, the Company maintained a full valuation allowance on its net deferred tax assets as of September 30, 2018.

As of September 30, 2018 and December 31, 2017, the Company had not completed its accounting for the tax effects of enactment of the Tax Act; however, the
Company has made a reasonable estimate of the effects of the Tax Act’s change in the federal rate and revalued its deferred tax assets based on the rates at which they are expected to reverse in the future, which is generally the new 21% federal
corporate tax rate plus applicable state tax rate. Based on the Company’s initial analysis of the impact, it consequently recorded a decrease related to deferred tax assets of $17.7 million as of December 31, 2017. The expense is offset with a
corresponding release of valuation allowance. As of September 30, 2018, the Company is continuing to gather additional information to complete its accounting for these items and expects to complete its accounting within the prescribed
measurement period.

In the ordinary conduct of its business, the Company is subject to lawsuits, investigations and claims, including, but not limited to, claims involving
students or graduates and routine employment matters. Although the Company cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against it, the Company does not believe that any currently pending
legal proceedings to which it is a party will have a material adverse effect on the Company’s business, financial condition, and results of operations or cash flows.

On July 6, 2018, the Company received an administrative subpoena from the Attorney General of the State of New Jersey. Pursuant to the subpoena, New
Jersey’s Attorney General has requested from the Company documents and detailed information relating to the November 21, 2012, Civil Investigative Demand letter addressed to the Company from the Massachusetts Office of the Attorney General
(“MOAG”) that resulted in a Final Judgment by Consent between the Company and the MOAG dated July 13, 2015. The Company has responded to this request and intends to continue cooperating with the New Jersey Attorney General’s Office.

9.

SEGMENTS

The for-profit education industry has been impacted by numerous regulatory changes, a changing economy and an onslaught of negative media attention. As a
result of these challenges, student populations have declined and operating costs have increased. Over the past few years, the Company has closed over ten locations and exited its online business. In 2017, the Company completed the teach-outs
of its Center City Philadelphia, Pennsylvania; Northeast Philadelphia, Pennsylvania; West Palm Beach, Florida; Brockton, Massachusetts and Lowell, Massachusetts schools. All of these schools were previously included in our HOPS segment and are
included in the Transitional segment as of December 31, 2017.

As discussed in Note 1 under Business Activities, on August 20,
2018, the Company decided to close the Lincoln College of New England campus at Southington, Connecticut. The Company expects to complete a teach-out and to close the campus by December 31, 2018. The results of this campus, which were
originally reported in the HOPS segment, will now be included in the Transitional segment as of September 30, 2018.

In the past, we offered any combination of programs at any campus. We have shifted our focus to program offerings that create greater differentiation among
campuses and promote attainment of excellence to attract more students and gain market share. Also, strategically, we began offering continuing education training to select employers who hire our graduates and this is best achieved at campuses
focused on the applicable profession.

As a result of the regulatory environment, market forces and our strategic decisions, we now operate our business in three reportable segments: (a) the
Transportation and Skilled Trades segment; (b) the Healthcare and Other Professions segment; and (c) the Transitional segment.

Our reportable segments have been determined based on a method by which we now evaluate performance and allocate resources. Each reportable segment
represents a group of post-secondary education providers that offer a variety of degree and non-degree academic programs. These segments are organized by key market segments to enhance operational alignment within each segment to more
effectively execute our strategic plan. Each of the Company’s schools is a reporting unit and an operating segment. Our operating segments are described below.

Healthcare and Other Professions – The
Healthcare and Other Professions segment offers academic programs in the career-oriented disciplines of health sciences, hospitality and business and information technology (e.g. dental assistant, medical assistant, practical nursing, culinary
arts and cosmetology).

Transitional – The Transitional segment refers to campuses that are being taught-out and closed and operations that are being phased out. The schools in the Transitional segment employ a gradual teach-out process that
enables the schools to continue to operate to allow their current students to complete their course of study. These schools are no longer enrolling new students.

The Company continually evaluates each campus for profitability, earning potential, and customer satisfaction. This evaluation takes several factors into
consideration, including the campus’s geographic location and program offerings, as well as skillsets required of our students by their potential employers. The purpose of this evaluation is to ensure that our programs provide our students with
the best possible opportunity to succeed in the marketplace with the goals of attracting more students to our programs and, ultimately, to provide our shareholders with the maximum return on their investment. Campuses in the Transitional segment
have been subject to this process and have been strategically identified for closure.

We evaluate segment performance based on operating results. Adjustments to reconcile segment results to consolidated results are included under the caption
“Corporate,” which primarily includes unallocated corporate activity.

During the three and nine months ended September 30, 2018, September 30, 2017 and at December 31, 2017, the Company reclassified its Marietta, Georgia
campus from the HOPS segment to the Transportation and Skilled Trades segment. This reclassification occurred to address how the Company evaluates performance and allocates resources and was approved by the Company’s Board of Directors.

On August 20, 2018, the Company decided to teach-out the LCNE campus at Southington, Connecticut. LCNE results, which was previously reported in the HOPS
segment, is now included in the Transitional segment as of September 30, 2018 and 2017. The Company expects to complete the teach-out and exit the LCNE campus by December 31, 2018.

The carrying amount and estimated fair value of the Company’s financial instrument assets and liabilities, which are not measured at fair value on the
Condensed Consolidated Balance Sheet, are listed in the table below:

September 30, 2018

Carrying

Amount

Quoted Prices in

Active Markets

for Identical

Assets

(Level 1)

Significant Other

Observable Inputs

(Level 2)

Significant

Unobservable

Inputs

(Level 3)

Total

Financial Assets:

Cash and cash equivalents

$

10,183

$

10,183

$

-

$

-

$

10,183

Restricted cash

7,820

7,820

-

-

7,820

Prepaid expenses and other current assets

2,213

-

2,213

-

2,213

Financial Liabilities:

Accrued expenses

$

13,783

$

-

$

13,783

$

-

$

13,783

Other short term liabilities

557

-

557

-

557

Credit facility

24,374

-

20,043

-

20,043

December 31, 2017

Carrying

Amount

Quoted Prices in

Active Markets

for Identical Assets

(Level 1)

Significant Other

Observable Inputs

(Level 2)

Significant

Unobservable

Inputs

(Level 3)

Total

Financial Assets:

Cash and cash equivalents

$

14,563

$

14,563

$

-

$

-

$

14,563

Restricted cash

39,991

39,991

-

-

39,991

Prepaid expenses and other current assets

2,352

-

2,352

-

2,352

Financial Liabilities:

Accrued expenses

$

11,771

$

-

$

11,771

$

-

$

11,771

Other short term liabilities

558

-

558

-

558

Credit facility

52,593

-

47,200

-

47,200

We estimate fair value of Facility 1 of the Credit Facility based on a present value analysis utilizing aggregated market yields obtained from independent
pricing sources for similar financial instruments.

The carrying amounts reported on the Consolidated Balance Sheets for Cash and cash equivalents, Restricted cash and Noncurrent restricted cash approximate
fair value because they are highly liquid.

The carrying amounts reported on the Consolidated Balance Sheets for Prepaid expenses and other current assets and Accrued expenses and Other short term
liabilities approximate fair value due to the short-term nature of these items.

11.

RELATED PARTY

The Company has an agreement with MATCO Tools whereby MATCO provides the Company, on an advance commission basis, credits in MATCO branded tools, tool
storage, equipment, and diagnostics products. The chief executive officer of the parent Company of MATCO is considered an immediate family member of one of the Company’s board members. The amount of the Company’s purchases from this third party
was $0.4 million for the nine months ended September 30, 2018. Management believes that its agreement with MATCO is an arm’s length transaction and on similar terms as would have been obtained from unaffiliated third parties.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion regarding Lincoln Educational Services Corporation may contain forward-looking statements regarding our business, prospects and
results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such
forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2017, as
filed with the Securities and Exchange Commission (the “SEC”) and in our other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We
undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made by us in this report and in
our other reports filed with the SEC that advise interested parties of the risks and factors that may affect our business.

The interim financial statements and related notes thereto filed in this Form 10-Q and the discussions contained herein should be read in conjunction with
the annual financial statements and notes included in our Form 10-K for the year ended December 31, 2017, as filed with the SEC, which includes audited consolidated financial statements for our three fiscal years ended December 31, 2017.

General

Lincoln Educational Services Corporation and its subsidiaries (collectively, the “Company”,
“we”, “our” and “us”, as applicable) provide diversified career-oriented post-secondary education to recent high school graduates and working adults. The Company, which currently operates 23 schools in 14 states, offers programs in
automotive technology, skilled trades (which, among other programs, include HVAC, welding and computerized numerical control and electronic systems technology), healthcare services (which, among other programs, include nursing, dental assistant,
medical administrative assistant and pharmacy technician), hospitality services (which include culinary, therapeutic massage, cosmetology and aesthetics) and business and information technology (which includes information technology and criminal
justice programs). The schools operate under Lincoln Technical Institute, Lincoln College of Technology, Lincoln College of New England, Lincoln Culinary Institute, and Euphoria Institute of Beauty Arts and Sciences and associated brand names.
Most of the campuses serve major metropolitan markets and each typically offers courses in multiple areas of study. Five of the campuses are destination schools, which attract students from across the United States and, in some cases, from
abroad. The Company’s other campuses primarily attract students from their local communities and surrounding areas. All of the campuses are nationally or regionally accredited and are eligible to participate in federal financial aid programs of
the U.S. Department of Education (the “DOE”) and applicable state education agencies and accrediting commissions which allow students to apply for and access federal student loans as well as other forms of financial aid.

Our business is organized into three reportable business segments: (a) the Transportation and Skilled Trades segment, (b) the Healthcare and Other
Professions (“HOPS”) segment, and (c) the Transitional segment, which consists of schools that have been or are currently being taught out. In November 2015, the Board of Directors of the Company approved a plan for the Company to divest the 18
campuses then comprising the HOPS segment due to a strategic shift in the Company’s business strategy. The Company underwent an exhaustive process to divest HOPS schools which proved successful in attracting various purchasers but, ultimately,
did not result in a transaction that our Board believed would enhance shareholder value. By the end of 2017, we had closed seven underperforming campuses leaving a total of 11 campuses remaining under the HOPS segment. The Company believes that
the closures of the aforementioned campuses have positioned the HOPS segment and the Company to be more profitable going forward.

The combination of several factors, including the inability of a prospective buyer of the HOPS segment to close on the purchase, the improvements the
Company has implemented in the HOPS segment operations and the closure of seven underperforming campuses, resulted in the Board reevaluating its divestiture plan and the Board’s determination that shareholder value would more likely be enhanced
by continuing to operate our HOPS segment as revitalized. Consequently, the Board of Directors has abandoned the plan to divest the HOPS segment and the Company now intends to retain and continues to operate the remaining campuses in the HOPS
segment. The results of operations of the campuses included in the HOPS segment are reflected as continuing operations in the consolidated financial statements.

In 2016, the Company completed the teach-out of its Hartford, Connecticut; Fern Park,
Florida; and Henderson (Green Valley), Nevada campuses, which originally operated in the HOPS segment. In 2017, the Company completed the teach-out of its Northeast Philadelphia, Pennsylvania; Center City Philadelphia, Pennsylvania; West Palm
Beach, Florida; Brockton, Massachusetts; and Lowell, Massachusetts schools, which also were previously in our HOPS segment and all of which were taught out and closed by December 2017 and are included in the Transitional segment as of
December 31, 2017.

On August 14, 2017, New England Institute of Technology at Palm Beach, Inc. (“NEIT”), a wholly-owned subsidiary of the Company, consummated the sale of the
real property located at 2400 and 2410 Metrocentre Boulevard East, West Palm Beach, Florida, including the improvements and other personal property located thereon (the “West Palm Beach Property”), to Tambone Companies, LLC, pursuant to a
previously disclosed purchase and sale agreement entered into on March 14, 2017. Pursuant to the terms of the sale agreement, as subsequently amended, the purchase price for the West Palm Beach Property was $15.8 million. As a result, the Company
recorded a gain on the sale in the amount of $1.5 million. As previously disclosed, the West Palm Beach Property served as collateral for a short term loan in the principal amount of $8.0 million obtained by the Company from its lender, Sterling
National Bank, on April 28, 2017, which loan matured upon the earlier of the sale of the West Palm Beach Property or October 1, 2017. Accordingly, on August 14, 2017, concurrently with the consummation of the sale of the West Palm Beach Property,
the Company repaid the term loan in an aggregate amount of $8.0 million, consisting of principal and accrued interest.

On July 9, 2018, NEIT entered into a commercial contract (the “Sale Agreement”) with Elite Property Enterprise, LLC, pursuant to which NEIT agreed to sell
to Elite Property Enterprise, LLC the real property owned by NEIT located at 1126 53rd Court North, Mangonia Park, Palm Beach County, Florida and the improvements and certain personal property located thereon (the “Mangonia Park
Property”), for a cash purchase price of $2,550,000. On August 23, 2018, NEIT, consummated the sale of the Mangonia Park Property. At the closing, NEIT paid a real estate
brokerage fee equal to 5% of the gross sales price and other customary closing costs and expenses. Pursuant to the provisions of the Company’s Credit Agreement with its lender,
Sterling National Bank, the net cash proceeds of the sale of the Mangonia Park Property were deposited into an account with the lender to serve as additional security for loans and other financial accommodations provided to the Company and its
subsidiaries under the Credit Agreement.

On July 11, 2018, the Company and its wholly-owned subsidiaries (collectively with the Company, the “Borrowers”) entered into a third amendment (the
“Third Amendment”) of the Credit Agreement dated as of March 31, 2017 (as previously amended, the “Credit Agreement”) between the Borrowers and Sterling National Bank, as lender (the “Bank”). Prior to the Third Amendment, if the Mangonia Park
Property was sold, NEIT was required to apply the net proceeds of such sale to repay a corresponding amount of the outstanding principal balance of revolving loans provided under the Credit Agreement, which repayment of principal would
permanently reduce the principal amount of revolving loans available under the Credit Agreement. As a result of the Third Amendment, when the Mangonia Park Property was sold, NEIT deposited the net proceeds of such sale into a non-interest
bearing cash collateral account to be held at and by the Bank as additional collateral for the loans outstanding under the Credit Agreement. Pursuant to the Third Amendment, the Bank reserves the right to apply the funds held in such cash
collateral account to the repayment of the outstanding principal balance of the loans outstanding under the Credit Agreement.

On August 20, 2018, the Company decided to cease operations, effective December 31, 2018, at the Lincoln College of New England (“LCNE”) campus at
Southington, Connecticut. The decision to close the campus follows the previously reported placement of LCNE on probation by the college’s institutional accreditor, the New England Association of Schools and Colleges (“NEASC”). After evaluating
alternative options, the Company concluded that teaching-out and closing the campus was in the best interest of the Company and its students. Subsequent to formalizing the LCNE closure decision, the Company partnered with Goodwin College,
another NEASC-accredited institution in the region, to assist LCNE students to complete their programs of study. The majority of the LCNE students will continue their education at Goodwin College thereby limiting some of the Company’s closing
costs. The revenue, net loss and ending population of LCNE, as of December 31, 2017, were $8.4 million, $1.6 million and 397 students, respectively. The Company expects to record costs associated with the closure in 2018 in the range of $3.5
million to $4.5 million, including $2 million in connection with the termination of the LCNE campus lease, which will be paid in equal monthly installments through January 2020, and approximately $700,000 of severance payments. LCNE results,
which was previously reported in the HOPS segment, is now included in the Transitional segment as of September 30, 2018. The Company expects to complete the teach-out and close the LCNE campus by December 31, 2018.

As of September 30, 2018, we had 11,732 students enrolled at 23 campuses in our programs.

Critical Accounting Policies and Estimates

For a description of our critical accounting policies and estimates, refer to “Management’s Discussion and Analysis of Financial Condition and Results of
Operations – Critical Accounting Policies and Estimates” and Note 1 of the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. For Revenue Recognition refer to
Note 3 to the condensed consolidated financial statements contained herein.

The following table sets forth selected consolidated statements of continuing operations data as a percentage of revenues for each of the periods indicated:

Three Months Ended

September 30,

Nine Months Ended

September 30,

2018

2017

2018

2017

Revenue

100.0

%

100.0

%

100.0

%

100.0

%

Costs and expenses:

Educational services and facilities

49.4

%

52.4

%

49.3

%

51.2

%

Selling, general and administrative

56.4

%

57.4

%

58.5

%

58.1

%

Loss (gain) on sale of assets

0.0

%

-0.1

%

0.1

%

-0.1

%

Total costs and expenses

105.8

%

109.7

%

107.9

%

109.2

%

Operating loss

-5.8

%

-9.7

%

-7.9

%

-9.2

%

Interest expense, net

-0.8

%

-1.1

%

-0.9

%

-4.6

%

Loss from operations before income taxes

-6.6

%

-10.8

%

-8.8

%

-13.8

%

Provision for income taxes

0.1

%

0.1

%

0.1

%

0.1

%

Net Loss

-6.7

%

-10.9

%

-8.9

%

-13.9

%

Three Months Ended September 30, 2018 Compared to Three Months Ended September 30, 2017

Consolidated Results of Operations

Revenue. Revenue increased by $2.8 million,
or 4.1%, to $70.1 million for the three months ended September 30, 2018 from $67.3 million in the prior year comparable period. Increased revenue was a result of four consecutive quarters of start growth, excluding the Transitional segment,
which has helped drive a 3.6% and 12.6% increase in average student population for the Transportation and Skilled Trades segment and the HOPS segment, respectively. Excluding the Transitional segment, which had revenue of $0.8 million for the
three months ended September 30, 2018 compared to $2.6 million in the prior year comparable period, revenue would have increased by $4.6 million, or 7.1% quarter over quarter.

Total student starts increased by 4.7% for the three months ended September 30, 2018 as
compared to the prior year comparable period. Excluding the Transitional segment student starts would have increased 7.5% quarter over quarter. We attribute this growth to continued investments in marketing, enhanced high school
programs and improved admissions process driving more consistency from lead to start.

For a general discussion of trends in our student enrollment, see “Seasonality and Outlook” below.

Educational services and facilities expense.
Our educational services and facilities expense decreased by $0.6 million, or 1.7%, to $33.5 million for the three months ended September 30, 2018 from $34.1 million in the prior year comparable period. The expense reductions were primarily due
to the Transitional segment which accounted for $1.8 million in cost savings, partially offset by $1.0 million in additional books and tools expense and $0.2 million in additional instructional expenses. Increases in books and tools expense were
a result of the correlation between providing laptops for a growing number of program offerings and an increased student population. Educational services and facilities expense as a percentage of revenue decreased to 47.8% for the three months
ended September 30, 2018 from 50.6% in the prior year comparable period.

Selling, general and administrative expense. Our selling, general and administrative expense increased by $0.6 million, or 1.7%, to $36.1 million for the three months ended September 30, 2018 from $35.5 million in the prior year
comparable period. The Transitional segment and corporate accounted for $1.6 million and $0.5 million in cost reductions, which were fully offset by increased selling, general and administrative expenses. The increase in expenses were due to
higher bad debt expense of $2.0 million and increased marketing expense of $1.0 million. Bad debt expense has increased due to larger reserves, driven by a higher accounts receivable balance. The Company’s accounts receivable during
the quarter was impacted by an increased number of student files selected for verification by the Department of Education. Consequently, this has resulted in additional documentation requests for students before the disbursement of scheduled
funding. The change in the verification process has impacted the entire industry and has driven our average verification rate, which had been historically about 25%, to between 25% and 60%. Management expects this issue to normalize in the
fourth quarter of 2018.

Marketing investments during the three months ended September 30, 2018 were approximately $1.0 million over the prior year, $0.4 million of which was for
creative development. While marketing investments have increased in the current quarter, the cost to obtain prospective students has remained essentially flat when compared to the prior year. Marketing dollars are providing a return on
investment and are expected to yield start growth over the next several quarters.

Selling general and administrative expense, as a percentage of revenue decreased to 51.5% for the three months ended September 30, 2018 from 52.7% in the
prior year comparable period.

Loss (gain) on sale of asset. Loss on sale of assets increased to $0.4 million for the three months ended September 30, 2018,
from a gain on sale of asset of $1.5 million in the prior year comparable period. The $2.0 million increase was primarily driven by a $0.4 million loss on the sale of the Mangonia Park Property on August 23, 2018; and a $1.5 million
gain in the prior year comparable quarter resulting from the sale of the West Palm Beach Property on August 14, 2017.

Net interest expense. Net interest expense
for the three months ended September 30, 2018 decreased by $1.0 million, or 11.7%, to $0.6 million from $0.7 million in the prior year comparable period. The expense reduction was due to additional interest expense incurred in the prior year in
relation to an $8.0 million bridge term loan secured by our West Palm Beach Property. The bridge term loan was repaid in August 2017 upon the sale of the West Palm Beach Property.

Income taxes. Our provision for income taxes
was $0.1 million, or 9.1% of pretax loss, for the three months ended September 30, 2018, compared to a provision for income taxes of $0.1 million, or 3.5% of pretax loss, in the prior year comparable period.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax
Act, among other things, eliminates the corporate alternative minimum tax (the “AMT”) and changes how existing AMT credits can be realized either to offset regular tax liability or to be refunded.

As of September 30, 2018 we have not completed our analysis of the tax effects of enactment of the Tax Act; however, we have made a reasonable estimate of
the effects of the Tax Act’s change in the federal rate and revalued our deferred tax assets based on the rates at which they are expected to reverse in the future, which is generally the new 21% federal corporate tax rate plus applicable state
tax rate. Based on our initial analysis of the impact, we recorded a decrease related to deferred tax assets of $17.7 million at December 31, 2017. The expense is offset with a corresponding release of valuation allowance.

No other federal or state income tax benefit was recognized for the current period loss due to the recognition of a full valuation allowance.

Revenue. Revenue decreased by $1.4 million,
or 0.7%, to $193.1 million for the nine months ended September 30, 2018 from $194.5 million in the prior year comparable period. This decrease was driven by the Transitional segment which accounted for $9.0 million in reduced revenue year over
year. Excluding the Transitional segment, which had revenue of $4.7 million for the nine months ended September 30, 2018 compared to $13.7 million in the prior year comparable period, revenue would have increased by $7.6 million, or 4.2%.
Increased revenue was a result of an increased student population due to four consecutive quarters of start growth in combination with an increase in average revenue per student for the Transportation and Skilled Trades segment and the HOPS
segment.

Total student starts increased by 4.4% for the nine months ended September 30, 2018 as compared to the prior year comparable period. Excluding the Transitional segment, student starts would have increased 6.8% year over year. We attribute this growth to continued investments in marketing, enhanced high school
programs and improved admissions process driving more consistency from lead to start.

For a general discussion of trends in our student enrollment, see “Seasonality and Outlook” below.

Educational services and facilities expense.
Our educational services and facilities expense decreased by $5.0 million, or 5.1%, to $94.2 million for the nine months ended September 30, 2018 from $99.2 million in the prior year comparable period. The expense reductions were primarily due
to the Transitional segment, which accounted for $6.8 million in cost savings partially offset by $1.6 million in additional books and tools expense and $0.3 million in additional instructional expenses. The increase in books and tools expense
was a result of the correlation between providing laptops for a growing number of program offerings and an increased student population.

Educational services and facilities expense as a percentage of revenue decreased to 48.8% for the nine months ended September 30, 2018 from 51.0% in the
prior year comparable period.

Selling, general and administrative expense. Our selling, general and administrative expense decreased by $1.3 million, or 1.2%, to $108.1 million for the nine months ended September 30, 2018 from $109.4 million in the prior year
comparable period. The Transitional segment and corporate accounted for $5.1 million and $0.3 million, respectively, in cost reductions, which were partially offset by increased selling, general and administrative expenses. The increase in
expenses were due to higher bad debt expense of $2.5 million and increased marketing expense of $2.2 million. Bad debt expense has increased due to larger reserves, driven by a higher accounts receivable balance. The Company’s
accounts receivable during the quarter was impacted by an increased number of student files selected for verification by the Department of Education. Consequently, this has resulted in additional documentation requests for students before the
disbursement of scheduled funding. The change in the verification process has impacted the entire industry and has driven our average verification rate, which had been historically about 25%, to between 25% and 60%. Management expects this
issue to normalize in the fourth quarter of 2018.

Marketing investments during the nine months ended September 30, 2018 were approximately $2.2 million over the prior year, $0.8 million of which was for
creative development. While marketing investments have increased in the current quarter, the cost to obtain prospective students has remained essentially flat when compared to the prior year. Marketing dollars are providing a return on
investment and are expected to yield start growth over the next several quarters.

Selling, general and administrative expense as a percentage of revenue decreased to 56.0% for the nine months ended September 30, 2018 from 56.3% in the
prior year comparable period.

As of September 30, 2018, we had total outstanding loan commitments to our students of $59.1 million, as compared to $51.9 million at December 31, 2017.
The increase was due to an increased number of students electing to take our institutional loans to finance their education costs that are not covered by a third party or financial aid. Our institutional loans constitute loans of last resort,
available to assist our most financially challenged students. Further contributing to the increase in loan commitments is a notable increase in student population and seasonality of the business.

Loss (gain) on sale of asset. Loss on sale of assets increased to $0.5 million for the nine months ended September 30, 2018,
from a gain on sale of asset of $1.6 million in the prior year comparable period. The $2.1 million increase was primarily driven by a $0.4 million loss on the sale of the Mangonia Park Property on August 23, 2018 and a $1.5 million
gain in the prior year comparable quarter resulting from the sale of the West Palm Beach Property on August 14, 2017.

Net interest expense. Net interest expense for the nine months ended September 30, 2018 decreased by $4.8 million, or 73.8%, to $1.7 million from $6.6 million in the prior year comparable period. The decrease was
the result of the termination of our previous term loan which yielded significantly higher rates and the related fees and expenses associated with its early termination, which occurred on March 31, 2017. Additional interest expense was also
incurred in the prior year in relation to an $8.0 million bridge term loan secured by our West Palm Beach Property, which was repaid in August 2017.

Income taxes. Our provision for income taxes
was $0.2 million, or 1.3% of pretax loss, for the nine months ended September 30, 2018, compared to a provision for income taxes of $0.2 million, or 0.8% of pretax loss, in the prior year comparable period.

As noted above, on December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax
Act”). The Tax Act, among other things, eliminates the corporate alternative minimum tax (the “AMT”) and changes how existing AMT credits can be realized either to offset regular tax liability or to be refunded.

As of September 30, 2018, we have not completed our analysis of the tax effects of enactment of the Tax Act; however, we have made a reasonable estimate of
the effects of the Tax Act’s change in the federal rate and revalued our deferred tax assets based on the rates at which they are expected to reverse in the future, which is generally the new 21% federal corporate tax rate plus applicable state
tax rate. Based on our initial analysis of the impact, we recorded a decrease related to deferred tax assets of $17.7 million at December 31, 2017. The expense is offset with a corresponding release of valuation allowance.

No other federal or state income tax benefit was recognized for the current period loss due to the recognition of a full valuation allowance.

Segment Results of Operations

The for-profit education industry has been impacted by numerous regulatory changes, a changing economy and an onslaught of negative media attention. As a
result of these challenges, student populations have declined and operating costs have increased. Over the past few years, the Company has closed over ten locations and exited its online business. In 2017, the Company completed the teach-out of
its Center City Philadelphia, Pennsylvania; Northeast Philadelphia, Pennsylvania; West Palm Beach, Florida; Brockton, Massachusetts; and Lowell, Massachusetts schools. All of these schools were previously included in our HOPS segment and as of
December 31, 2017, they have all been closed.

On August 20, 2018, the Company decided to teach-out the LCNE campus at Southington, Connecticut. LCNE results, which was previously reported in the HOPS segment, is
now included in the Transitional segment as of September 30, 2018. The Company expects to complete the teach-out and exit the LCNE campus by December 31, 2018.

In the past, we offered any combination of programs at any campus. We have shifted our focus to program offerings that create greater differentiation among
campuses and promote attainment of excellence to attract more students and gain market share. Also, strategically, we began offering continuing education training to select employers who hire our graduates and this is best achieved at campuses
focused on the applicable profession.

As a result of the regulatory environment, market forces and our strategic decisions, we now operate our business in three reportable segments: (a) the
Transportation and Skilled Trades segment; (b) the Healthcare and Other Professions segment; and (c) the Transitional segment. Our reportable segments have been determined based on a method by which we now evaluate performance and allocate
resources. Each reportable segment represents a group of post-secondary education providers that offer a variety of degree and non-degree academic programs. These segments are organized by key market segments to enhance operational alignment
within each segment to more effectively execute our strategic plan. Each of the Company’s schools is a reporting unit and an operating segment. Our operating segments are described below.

Healthcare and Other Professions – The
Healthcare and Other Professions segment offers academic programs in the career-oriented disciplines of health sciences, hospitality and business and information technology (e.g. dental assistant, medical assistant, practical nursing, culinary
arts and cosmetology).

Transitional – The Transitional segment refers
to campuses that are being taught-out and closed and operations that are being phased out. The schools in the Transitional segment employ a gradual teach-out process that enables the schools to continue to operate to allow their current students
to complete their course of study. These schools are no longer enrolling new students.

The Company continually evaluates each campus for profitability, earning potential, and customer satisfaction. This evaluation takes several factors into
consideration, including the campus’s geographic location and program offerings, as well as skillsets required of our students by their potential employers. The purpose of this evaluation is to ensure that our programs provide our students with
the best possible opportunity to succeed in the marketplace with the goals of attracting more students to our programs and, ultimately, to provide our shareholders with the maximum return on their investment. Campuses classified in the
Transitional segment have been subject to this process and have been strategically identified for closure.

We evaluate segment performance based on operating results. Adjustments to reconcile segment results to consolidated results are included under the caption
“Corporate,” which primarily includes unallocated corporate activity.

For all prior periods presented, the Company reclassified its Marietta, Georgia campus from the HOPS segment to the Transportation and Skilled Trades
segment. This reclassification occurred to address how the Company evaluates performance and allocates resources and was approved by the Company’s Board of Directors.

Three Months Ended September 30, 2018 Compared to Three Months Ended September 30, 2017

Transportation and Skilled Trades

Student starts increased 10.2% for the three months ended September 30, 2018 when compared to the prior year comparable period.

Operating income increased to $6.3 million for the three months ended September 30, 2018 from $6.1 million in the prior year comparable period mainly due to
the following factors:

·

Revenue increased by $2.2 million, or 4.5%, to $51.0 million for the three months ended September 30, 2018, as compared to $48.8 million in the prior year period. The
increase in revenue was primarily attributable to four consecutive quarters of start growth, most notably, a 10.2% increase in student starts in the current quarter, which drove a 3.6% increase in average student population.

·

Educational services and facilities expense increased by $0.6 million, or 2.6%, to $23.4 million for the three months ended September 30, 2018 from $22.8 million in the
prior year comparable period. The increase was driven by additional books and tools expense from the correlation between providing laptops for a growing number of program offerings and an increased student population

·

Selling, general and administrative expenses increased by $1.4 million, or 7.1%, to $21.3 million for the three months ended September 30, 2018 from $19.8 million in the
prior year comparable period. The increase was primarily driven by additional bad debt expense and marketing expense as detailed in the consolidated results of operations.

Healthcare and Other Professions

Student starts increased slightly by 0.7% for the three months ended September 30, 2018 when compared to the prior year comparable period.

Operating income increased to $0.8 million for the three months ended September 30, 2018 from $0.2 million in the prior year comparable period. The $0.6
million increase was mainly due to the following factors:

·

Revenue increased by $2.4 million, or 14.9%, to $18.3 million for the three months ended September 30, 2018, as compared to $15.9 million in the prior year comparable
period. The increase in revenue was mainly attributable to a higher carry in population; four consecutive quarters of student start growth, which drove a 12.6% increase in average student population; and an increase in average
revenue per student.

·

Educational services and facilities expense increased by $0.6 million, or 7.1% to $8.9 million for the three months ended September 30, 2018 from $8.3 million in the
prior year comparable period. The increase in expense was primarily driven by increased instructional expense and books and tools expense due to a 12.6% increase in average student population quarter over quarter.

·

Selling, general and administrative expense increased by $1.2 million, or 16.6%, to $8.6 million for the three months ended September 30, 2018 from $7.3 million in the
prior year comparable period. The increase was primarily driven by additional bad debt expense and marketing expense as detailed in the consolidated results of operations.

Transitional

The following table lists the schools previously categorized in the Transitional segment as of December 31, 2017. As of September 30, 2018 the LCNE campus
at Southington, Connecticut was included in the Transitional segment.

Campus

Date Closed

Date Scheduled to Close

Northeast Philadelphia, Pennsylvania

August 31, 2017

N/A

Center City Philadelphia, Pennsylvania

August 31, 2017

N/A

West Palm Beach, Florida

September 30, 2017

N/A

Brockton, Massachusetts

N/A

December 31, 2017

Lowell, Massachusetts

N/A

December 31, 2017

Fern Park, Florida

March 31, 2016

N/A

Hartford, Connecticut

December 31, 2016

N/A

Henderson (Green Valley), Nevada

December 31, 2016

N/A

Revenue for the campuses in the above table have been classified in the Transitional segment for comparability for the three months ended September 30,
2018 and 2017.

Revenue was $0.8 million and $2.6 million for the three months ended September 30, 2018 and 2017, respectively. The decrease in revenue was due to one
campus classified in the Transitional segment in the current quarter versus five campuses classified in the segment in the prior year comparable quarter. The Transitional segment during the quarter includes the Lincoln College of New England
campus at Southington, Connecticut.

Operating loss was $1.9 million and $3.4 million for the three months ended September
30, 2018 and 2017, respectively.

Corporate and Other

This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses were $5.2 million for the three months
ended September 30, 2018 as compared to $3.7 million in the prior year comparable period. The $1.5 million increase was primarily driven by a $0.4 million loss from the sale of the Mangonia Park Property on August 23, 2018 and a $1.5 million
gain in the prior year comparable quarter resulting from the sale of the West Palm Beach Property on August 14, 2017. Excluding the sale of the Mangonia Park Property and the West Palm Beach Property in the current and prior year quarters,
respectively, Corporate expenses would have decreased by $0.5 million quarter over quarter.

The following table present results for our three reportable segments for the nine months ended September 30, 2018 and 2017: